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How To Get A Mortgage For A Grade 2 Listed House
If you are looking for a mortgage or short-term finance for a grade 2 listed home, you may come up against a few challenges in finding a lender who will consider this type of property.
When you hear the phrase ‘listed building’, you might think of a stately home or some other grand structure likely to be in public ownership and, therefore, already protected from development.
However, you might be surprised to learn that there are estimated to be as many as half a million listed properties across England and Wales, and the vast majority are privately owned. Some villages, for example, have around 200 listed properties.
92% of listed buildings are in the Grade 2 category type of property – the lowest of the three levels of protection.
More and more people are looking to live in unconventional properties, such as mill conversions, windmill conversions, and even old churches.
Owning a Grade 2 property can be a privilege but comes with responsibilities. You can’t carry out any form of alterations, however small, without obtaining the local authority's consent.
We’re not just talking about something as crude as sticking a modern extension onto an 18th-century property. Even something as minor as changing the doors or windows or installing a satellite dish requires prior consent. If you obtain the necessary consent, your work may need to be carried out by specialist tradespeople and may cost more.
Obtaining a mortgage on Grade 2 listed property is possible, but this is undoubtedly a niche market.
When looking for a listed building mortgage, it helps to deal with an authorised and regulated mortgage adviser who has access to a wide range of specialist lenders who are happy to lend on properties with the listed building consent.
In This Guide:
The Grade 2 Listed Property Mortgage Market
Do I Need Insurance for a Listed Property?
Remortgaging a Grade 2 Listed House
Can You Rent Out a Listed Property?
The Grade 2 Listed Property Mortgage Market
Not all lenders participate in this market, but several high street lenders and a number of specialist lenders are willing to consider a mortgage on a listed Grade 2 property.
Some high-street lenders and building societies also offer very competitive interest rates, with their lowest rates for Grade 2 properties comparable to those they offer on standard properties.
Some lenders offer Grade 2 mortgages with deposits as low as 10%, but in many cases, a deposit of 25-30% of the property value is required.
Many lenders will cap the Grade 2 property mortgage term at 20 to 25 years.
Obtaining a Grade 2 mortgage with adverse credit is possible, although this is likely to restrict the choice of lenders.
If the property has a significant amount of land attached, has outbuildings, or is used for commercial purposes, you will likely need a specialist lender.
Do I Need Insurance for a Listed Property?
No mortgage lender will lend to you unless the property is insured via a suitable buildings insurance policy. If the property is Grade 2 listed, the age and characteristics of the property might make it very difficult to obtain building insurance, or else the insurance might be very expensive.
Before applying for your mortgage, getting an indicative quote for buildings insurance might be a good idea to ensure that the quote you receive doesn’t put you off buying the property altogether.
Remortgaging a Grade 2 Listed House
As with most mortgage purchases, your Grade 2 listed mortgage will likely have an initial period at a fixed, discounted or capped interest rate. When that period ends, it’s time to shop around, once again, with the assistance of a specialist adviser.
Re-mortgaging to better deals is a major part of the Grade 2 mortgage market, just as it is in the standard residential market. When your fixed, discounted or capped rate ends, it’s time to see if you can get a cheaper deal.
Can You Rent Out a Listed Property?
The Grade 2 listed mortgage market is a niche area, but this is especially true of the Grade 2 buy-to-let (BTL) mortgage market. These types of mortgages are available, but lenders will want to see evidence that you have experience maintaining Grade 2 listed properties before they will give you a BTL mortgage.
So, you shouldn’t expect to be able to buy a Grade 2 property for the first time today and then expect to be approved for a BTL mortgage on it. If you have lived in another Grade 2 property before, or the Grade 2 property has been your residence, and now you want to rent it out, you may have a better chance of getting a BTL mortgage.
If you can realistically obtain a buy to let mortgage on a Grade 2 property, then again, your specialist adviser can assist you in identifying suitable lenders and finding the best deal for your circumstances.
Bridging Finance
Bridge loans are short-term arrangements, usually for terms of between one and 18 months. Frequently, you don’t make any monthly interest repayments, but you repay all of the interest and the capital at the end of the term. They are sometimes used to raise funds for refurbishments – although see above for details of restrictions on alterations to Grade 2 properties.
For example, some people have used bridging finance to fund refurbishments on Grade 2 properties that, in many ways, were their dream homes but where the property was uninhabitable for some reason.
They purchase the property using a bridging loan, carry out the necessary refurbishments to make the property habitable, and then take out a longer-term mortgage on the property, where the mortgage amount is used to pay off the bridging loan.
Other buyers of Grade 2 properties have taken advantage of bridging finance when they have successfully bid for listed properties at auction and where the deadline for paying the money would have expired before a standard mortgage application process could be completed.
Bridging loan applications usually complete much faster than mortgage applications.
Again, this is a specialist area, where it pays to seek the advice of a specialist mortgage broker regulated by the FCA (Financial Conduct Authority), who regularly deals with this type of finance.
Bridging Finance Calculator
Use our bridging finance calculator below to get an indicative quote of what a refurbishment bridging loan might cost you.
Here are some of the bridging rates we've secured for clients recently:
Rates from: Downsizing/Upsizing Releasing Funds From Your Home Short-Term Lease Finance Auction Purchase As at 3rd January 2024 Rates from: Light & Heavy Refurb Finance For Unmortgageable Properties Land Purchase with planning As at 3rd January 2024 Rates from: Up to 80% LTV Minimum Loan £500k Minimum net income £100k As at 3rd January 2024 Thank You for your interest - please complete the form below and a member of our team will be in contact.Residential
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Remember, bridging loan interest rates vary depending on your lender, loan-to-value, exit strategy, the current market, and other factors.
Is it Hard to Get a Mortgage on a Listed Building?
Obtaining a mortgage for a listed building, such as a Grade 2 listed house, can indeed present unique challenges compared to standard properties. Listed buildings are subject to strict regulations to preserve their historical and architectural significance, which can impact their value and condition. Lenders may perceive them as higher risk due to potential maintenance costs and restrictions on alterations.
However, it's not impossible to secure a mortgage for a listed property. With thorough research, preparation, and possibly the assistance of specialists familiar with historic properties, you can increase your chances of success. Factors such as the property's condition, its listed status, and your financial situation will influence the mortgage application process.
How We Can Help
At Clifton Private Finance, our expert mortgage advisors can connect you with the right lender and find you the best deal for your circumstances. We have relationships with high street, private and specialist lenders across the market, and we can negotiate on your behalf.
Our team can provide an in-depth analysis of your options and guide you through the process of sourcing funding for a unique property.
To see what we can do for you, call us at 0117 205 4831 or book a free consultation below.
